Fair Work Amendment (Protecting Vulnerable Workers) Act 2017: What are the implications for employers?

No doubt you have heard whispers about the Federal Government’s Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 (Cth) in recent months. Now, it’s time to get serious and ensure you are abreast of the key provisions. Why? – on 15 September 2017 the new legislation, the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (‘Vulnerable Workers Act’) became law, with the majority of changes now in force.

Directed at reducing the systematic exploitation of vulnerable workers that was brought to the fore by the recent 7-Eleven (and similar) scandals, the Vulnerable Workers Act will increase the maximum civil penalties for certain contraventions of the Fair Work Act 2009 (Cth) (‘FW Act’), expand the accessorial liability provisions of the FW Act, and grant the Fair Work Ombudsman (‘FWO’) enhanced powers to aid its investigative function.

Whilst the Vulnerable Workers Act appears to target franchises, such as 7-Eleven that have been found to systematically underpay employees, it has wider reaching implications for employers. For example, increasing the penalty for failing to meet record keeping obligations. Accordingly, it acts as a suitable reminder for businesses to review their practices to ensure compliance.

Key Changes

Increased Penalties for Serious Contraventions

The Vulnerable Workers Act introduces new penalties for “serious contraventions” of the FW Act where there is a knowing contravention that is part of a systematic pattern of conduct. Employers found guilty of some serious contraventions may liable for a penalty of up to $126,000 for individuals and $630,000 per contravention for companies. To determine whether a contravention is part of a “systematic pattern of conduct” a court may consider (among other factors): the number of contraventions, the period over which the contraventions occurred, the number of people affected by the relevant contraventions, and the response to (or failure to respond to) any complaints made about the contraventions.

Eliminating ‘Pay Back’ Arrangements

The Vulnerable Workers Act expressly prohibits employers from unreasonably seeking payments from employees, patently directed at preventing the practice of employers paying correct wages and then seeking partial cash back payment of such wages.

Record Keeping Penalties

The Vulnerable Workers Act doubles the previous penalties for breach of record keeping provisions and triples existing penalties for providing false or misleading payslips or providing the FWO with false information.

FWO Enhanced Powers

The Vulnerable Workers Act enhances the investigative and evidence gathering powers of the FWO, which is now armed with the power to (among other things) issue notices on individuals and/or companies that require production of documents or information if it “reasonably believes” that the person has information relevant to a suspected contravention of the FW Act and/or is capable of giving evidence in an investigation.

New Reverse Onus

Notably, new provisions impose a reverse onus burden on employers to disprove allegations of improper record keeping made by employees or the FWO. Whilst the full reach of these provisions remains untested, the relevant provisions appear to create a rebuttable presumption that an employer has breached the relevant record keeping provisions (if alleged) and provides a defence where failure to keep records was “due to exceptional circumstances beyond the employer’s control”.

Increased Liability of franchisors

The Vulnerable Workers Act is also designed to extend liability to franchisors and holding companies for franchisee or subsidiary contraventions where they “knew or could reasonably be expected to have known” that a contravention would or was likely to occur.

While its name and media coverage may suggest that the Vulnerable Workers Act is solely targeted at preventing repeats of the 7-Eleven scandal, its provisions suggest much farther-reaching implications. A reactive, rather than a proactive approach to the amendments may prove costly. If you would like to discuss how the Vulnerable Workers Act might affect your business and how to best “armour up” please do not hesitate to contact Nick Stevens, Megan Cant or Jane Murray.